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161. Sample Trial Memorandum -- Odometer Fraud

INTRODUCTION

XXXXX XXXXXXXXXXX was originally charged in a 34 count indictment along with six others. XXXXXXXXXX's codefendants pled guilty to various offenses in June 1993. On July 21, 1993, a federal grand jury returned a superseding indictment against XXXXXXXXXXX. The superseding indictment narrowed the charges, dropping numerous counts, but adding two new odometer rollback counts (counts 12 and 13).

The conspiracy count in the superseding indictment alleges the same conspiracy as the original indictment, although allegations relating to certain of the original codefendants have been deleted. Similarly, the mail fraud counts involve the same scheme and mailings as originally charged, but some of the allegations regarding XXXXXXXXXXX's codefendants were omitted. Counts charging XXXXXXXXXXX (and others) with providing false odometer statements and with interstate transportation of altered securities (originally counts 18-22 and 28-32, respectively) were dropped, as well as count 17 which charged XXXXX XXXXXX, Sr., ("XXXXX") with failure to retain records, and counts 33-34 which charged XXXXXXXX XXX XXXXXX with perjury.

Vehicles 1-10 (and their corresponding odometer rollback counts) are the same as in the original indictment. Vehicles 11-15 from the original indictment, and their corresponding rollback counts, were dropped. Vehicles 11-12 in the superseding indictment, and corresponding rollback counts 12 and 13, first appear in the superseding indictment (hereafter "Indictment"). Vehicles 1-10 were vehicles that XXXXXX acquired and had rolled back during the conspiracy. Vehicles 11-12 are cars whose odometers XXXXXXXXXXX altered on his own, apart from the XXXXXX conspiracy.

Thus, the Indictment charges XXXXXXXXXXX with being a member of a conspiracy to roll back the odometers of used cars that were bought and sold by XXXXXX and other coconspirators (18 U.S.C. § 371). XXXXXXXXXXX is also charged in connection with the rollback of twelve specific cars identified in the Indictment (15 U.S.C. §§ 1984, 1990c, and 18 U.S.C. § 2), and five mailings in furtherance of a scheme to defraud buyers of used cars by selling them vehicles with rolled odometers and commensurately inflated prices (18 U.S.C. §§ 1341, 2).

FACTUAL BACKGROUND

XXXXXXXXXXX WAS A PROFESSIONAL "SPINNER".

XXXXXX XXXXXXXXXXX has made his livelihood by turning back the odometers on cars. He has turned back odometers for used car wholesalers like his former codefendant XXXXXX, and for private individuals. Like a contractor with a legitimate business, XXXXXXXXXXX obtained business from many sources, including word of mouth. Thus, he rolled back odometers for complete strangers who asked him to do so. Although he is aware that Congress has banned odometer tampering, XXXXXXXXXXX took a certain defiant pride in the way he made a living.

The above description of XXXXXXXXXXX is taken largely from his own grand jury testimony, though it could have come from an interview he gave from his jail cell which was printed in the Houston Post on July 4, 1993.[FN1] XXXXXXXXXXX's admissions are corroborated by testimony of witnesses for whom he worked, as well as by sting and surveillance information. The latter evidence was developed by Special Agent XXXX, of the Odometer Fraud Staff of the National Highway Traffic Safety Administration ("NHTSA") of the United States Department of Transportation and Houston Police Department ("HPD") Officers Lieutenant XXX and Sergeant XXX.

FN1. Publicity surrounding this case raises an issue that must be dealt with in voirdire. This publicity is discussed in the government's proposed voirdire.

A. XXXXXXXXXXX rolled back odometers for anyone who asked.

XXXXXXXXXXX admitted to the grand jury that he rolled back odometers for members of the public who asked him to do so. XXXXXXXXXXX's grand jury testimony is part of the government's proof.

In addition, on May 14, 1991, in a "sting" operation, HPD asked XXXXXXXXXXX to roll back the odometer on a vehicle. XXXXXXXXXXX proceeded to change the mileage on the car in question from approximately 91,303 to 31,303. The event was video and audio taped. This vehicle is identified as Vehicle No. 11 in the Indictment. This rollback is count 12 of the Indictment. Accordingly, related testimony and the tapes are part of the government's proof.

The government also performed surveillance on XXXXXXXXXXX on July 31, 1991. XXXXXXXXXXX was observed entering a Houston garage, meeting with an individual, and videotaped working under the dashboard of a BMW. The BMW is Vehicle No. 12 in the Indictment. This rollback is count 13 of the Indictment. Accordingly, related testimony and the tape are part of the government's proof.

B. XXXXXXXXXXX rolled back odometers as part of the XXXXXX XXXXXX conspiracy and mail fraud scheme.

The evidence will show that the conspiracy and scheme carried out by the original seven defendants and others generally involved the following steps: (1) the purchase of high-mileage used cars from various sources, although vehicles 1-10 were all purchased from an individual named XXXX XXXXXXXX, d/b/a XXXXX XXXXXXXX Auto Sales; (2) the alteration of the odometer of the vehicle to substantially lower mileage; (3) the sale of these same cars at lower mileage, usually to franchised car dealers in the Houston area; (4) the alteration of paperwork submitted to the purchasing dealer, and ultimately to the Texas State Department of Highways and Public Transportation, Division of Motor Vehicles, ("DMV") to mask the fact that the odometers had been altered (i.e., the mileage recorded on the title documents was altered to reflect the false odometer readings showing on the odometer, and other documents were created showing false low mileage figures); and (5) the ultimate DMV mailing of new title documents reflecting the false low mileage figure to the consumer.

XXXXXX and others who purchased and sold used cars in the Houston area, who also engaged in odometer rollbacks, agreed on how to accomplish title alterations. Thus, early in 1988, XXXXXX and .X. XXXXXXX discussed having their title alteration work done by the same individual (Indictment, overt act "a"). They agreed on a person to do the work, and a price to pay. Houston used car wholesaler XXXXXXX XXXXXXX joined the agreement. This portion of the conspiracy was in effect into 1990. XXXXXX, XXXXXX, and XXXXXX also used some of the same individuals to alter odometers on vehicles they purchased and sold.

XXXXXXXXXXX's role in this conspiracy was that of a "spinner." That is, XXXXXXXXXXX is one of the individuals who actually turned back odometers for XXXXXX, XXXXXXX, and XXXXXXX. XXXXXXXXXXX admitted in the grand jury that he rolled back odometers for XXXXXX, XXXXXXX, and others. As mentioned above, that grand jury testimony will be offered as evidence at trial.

In addition, XXXXXX, who pled guilty to the conspiracy in the original indictment, and others associated with him, will testify at trial. They will describe XXXXXXXXXXX's role in the conspiracy, identifying XXXXXXXXXXX as one of the people who rolled back odometers of cars that XXXXXX purchased and sold.

LEGAL ISSUES

A. Elements of the Government's Case.

XXXXXXXXXXX is charged in the Indictment with three types of violations. To prove the conspiracy charge set forth in Count One, the government must prove three things:

1) that two persons agreed to commit the crime of odometer tampering or mail fraud, during the period of approximately 1988 to August 1991;

2) that XXXXXXXXXXX knew the unlawful purpose of the agreement and joined it willfully; and

3) that at least one of the overt acts charged in the Indictment was accomplished by one of the conspirators for the purpose of carrying out the conspiracy.

To prove the odometer tampering charges set forth in counts 2 through 13, the government must prove either:

1) that XXXXXXXXXXX knowingly and willfully, with the intent to change the number of miles indicated on the odometers, reset and altered, or caused to be reset and altered, the odometers of the specified vehicles; or

2) that XXXXXXXXXXX was guilty of the conspiracy charged in Count One and that while he was a member of that conspiracy a conspirator altered the odometer on the vehicle in question in furtherance of or as a foreseeable consequence of the conspiracy.[FN2]

FN2. Fifth Circuit Pattern Jury Instruction, Criminal, No. 2.23, reflecting the principle of Pinkerton v. United States, 328 U.S. 640, 647-48 (1946), that a person is liable for offenses committed by coconspirators in furtherance of a conspiracy.

To prove the mail fraud charges set forth in counts 14 through 18, the government must prove three things:

1) that XXXXXXXXXXX and co-schemers knowingly created a scheme to defraud by obtaining money from used motor vehicle buyers through false mileage representations;

2) that XXXXXXXXXXX acted with a specific intent to commit fraud; and

3) that XXXXXXXXXXX mailed something, or caused something to be mailed, for the purpose of carrying out the scheme.

Alternatively, XXXXXXXXXXX can be convicted on the mail fraud counts on Pinkerton liability, that is, by showing that he was guilty of the conspiracy charged in Count One and that while he was a member of that conspiracy a conspirator committed the mail fraud offense in question in furtherance of or as a foreseeable consequence of the conspiracy.[FN3]

FN3. Fifth Circuit Pattern Jury Instruction, Criminal, No. 2.23.

In addition, XXXXXXXXXXX is charged with aiding and abetting the offenses of odometer tampering and mail fraud. Thus, his liability for these offenses can also rest on the following principle:

[I]f the defendant joins another person and performs acts with the intent to commit a crime, then the law holds the defendant responsible for the acts and conduct of such other persons just as though the defendant had committed the acts or engaged in such conduct.

Fifth Circuit Pattern Jury Instruction, Criminal, No. 2.06.

B. XXXXXXXXXXX's Liability Under These Principles.

XXXXXXXXXXX's liability for the conspiracy is plain. He admitted to rolling back odometers for XXXXXX and others, and XXXXXX identifies XXXXXXXXXXX as one of those who rolled back odometers for him. This places XXXXXXXXXXX in the conspiracy.

XXXXXX did not keep records regarding who committed what offenses as part of the conspiracy. Therefore, it is not known which of his spinners turned back the odometers on particular cars. Nevertheless, the proof will be clear that XXXXXX acquired and sold vehicles 1-10, and had their odometers altered while he owned them. The evidence will also show that these odometer alterations occurred while XXXXXXXXXXX was a member of the conspiracy.

Accordingly, XXXXXXXXXXX's liability for the rollback of cars 1-10 rests on the principle of Pinkerton v. United States, 328 U.S. 640, 647-48 (1946), that a person is liable for offenses committed by coconspirators in furtherance of a conspiracy. This principle is succinctly stated in the Fifth Circuit's Pattern Jury Instructions:

A conspirator is responsible for offenses committed by another conspirator if the conspirator was a member of the conspiracy when the offense was committed and if the offense was committed in furtherance of, or as a foreseeable consequence of, the conspiracy.

Fifth Circuit Pattern Jury Instruction, Criminal, No. 2.23. Thus, whether XXXXXXXXXXX or one of XXXXXX' other spinners rolled back the odometers on cars 1-10, XXXXXXXXXXX is held responsible for the offenses.

The same principle applies to the mail fraud counts. The mailings charged in those counts were DMV mailings of vehicle title documents to the ultimate consumer purchasers of five of the vehicles (vehicles 1, 2, 4, 6, 7) whose odometers were altered in the course of the conspiracy. The Houston consumers took those title documents from the mails, a necessary part of completing the fraudulent transactions at the heart of the mail fraud scheme. The rationale of Schmuck v. United States, 489 U.S. 705, 714 (1989) (mailing of title-registration forms to the state by dealer purchasing from odometer roller is "an essential step in the successful passage of title to the retail purchasers" so satisfies mailing requirement of mail fraud statute), establishes the proposition that DMV's mailing satisfies the jurisdictional requirement of the mail fraud statute. XXXXXXXXXXX was one of the schemers in the mail fraud by virtue of his rollback activity. Whether or not he rolled the particular cars involved in those counts is irrelevant under both Pinkerton and aiding and abetting liability.

Finally, XXXXXXXXXXX himself altered the odometers on vehicles 11-12. Thus, his liability for the corresponding odometer rollback counts (12 and 13) is direct.

C. Anticipated defenses.

The government does not anticipate that XXXXXXXXXXX will contest the government's proof that the odometers on the cars identified in the Indictment had their odometers rolled back. Nor does the government expect XXXXXXXXXXX to contest the proof that the odometers on vehicles 1-10 were altered while XXXXXX owned them. Nor does the government expect XXXXXXXXXXX to dispute his own rollback of vehicles 11-12.

Rather, XXXXXXXXXXX appears poised to argue two things. First, XXXXXXXXXXX views the law forbidding odometer rollbacks as a bad idea. He argues, for example, that manufacturer warranties on cars should not have mileage limits, and that he helps consumers by turning back mileage to enable them to obtain warranty work. Second, the government expects XXXXXXXXXXX to argue that the government cannot prove that he altered the mileage on vehicles 1-10, so he cannot be found guilty of offenses related to those vehicles.

The first line of argument suggested above is no defense to the charges. The wisdom of odometer tampering legislation is for Congress, not a jury, to decide.

XXXXXXXXXXX's second line of defense suggested above fails as a matter of law. The principles of Pinkerton and agency liability under the aiding and abetting statute remove any legal sting from XXXXXXXXXXX's protestation that he should not be convicted of rollback or mail fraud offenses because XXXXXX did not keep records which would identify which cars were rolled by XXXXXXXXXXX rather than other spinners.

XXXXXXXXXXX is also likely to offer typical defensive arguments that he did not join the conspiracy or mail fraud scheme, saying that he simply did a job, rolling odometers. Of course, whether his words and deeds amount to joining the conspiracy and scheme is a jury question.

D. Evidence of plea agreements with government witnesses.

The government will call certain witnesses who have entered plea agreements requiring their cooperation with the government's investigation of odometer fraud in Houston. Some of those witnesses may already have pled guilty, or served their sentence.

In its direct examination of such witnesses, the government is entitled to elicit testimony concerning the fact that the witness pled guilty to particular charges, the details of those charges, and the nature of the cooperation agreement with the government. The testimony can properly include testimony concerning the requirement in the plea agreement that the witness provide only truthful testimony and can be prosecuted if he commits perjury. The plea agreement itself is admissible. United States v. Edelman, 873 F.2d 791, 795 (5th Cir. 1989) (proper to admit plea agreement of codefendant who pled guilty, in which agreement the witness agreed to testify truthfully or face prosecution for perjury); United States v. Martino, 648 F.2d 367, 389 (5th Cir. 1981) (same), cert. denied, 456 U.S. 949 (1982).[FN4]

FN4. The D.C. Court of Appeals recently canvassed the law in this area. The D.C. Circuit agreed with the majority position, which is the Fifth Circuit's position, that it is proper for the prosecution to put into evidence the fact that a witness pled guilty to various offenses, is awaiting sentencing, and has a cooperation agreement requiring truthful testimony. United States v. Spriggs, 996 F.2d 320 (D.C. Cir.), cert. denied, 114 S. Ct. 359 (1993).

E.Video and audio tape evidence.

The government's evidence will include tapes made by law enforcement officers during a sting and surveillance conducted on XXXXXXXXXXX. What is seen is more important than what is heard, since XXXXXXXXXXX can be seen working under the dashboard of vehicle no. 12 (the surveillance video). With respect to vehicle no. 11 (the sting video), XXXXXXXXXXX's coming and going, and the odometer reading itself, is the significant evidence. Such evidence is admissible unless the audio portion of the tape is so unintelligible as to render the recording as a whole untrustworthy. United States v. Nixon, 777 F.2d 958, 973 (5th Cir. 1985). A videotape that is relevant, however, can be admitted even in the absence of an audio component. SeeUnited States v. White, 972 F.2d 590, 602 n.2 (5th Cir. 1992), cert. denied, 113 S.Ct. 1651 (1993).

F. Certified DMV title histories of motor vehicles.

The government will offer certified title histories for vehicles 1-10. These are documents that were submitted to DMV with an application for a new title after the rollback and alteration of title documents took place. These records are self-authenticating under Fed. R. Evid. 902(4), and need no custodian to be admitted in evidence.[FN5] These title histories are not hearsay, inasmuch as they are not offered for the truth of the matter asserted -- indeed, they are offered for the opposite, as evidence of untruthful mileage claims recorded in title and other documents. In any event, even if they were hearsay, they would be admissible under Fed. R. Evid. 803(8) and (14).[FN6]

FN5. Alternatively, they could also be authenticated by the DMV certification under Fed. R. Evid. 901(a), as illustrated by Fed. R. Evid. 901(b)(7).

The government will introduce portions of XXXXXXXXXXX's grand jury testimony at the trial.[FN7] XXXXXXXXXXX's own statements are not hearsay, so can be admitted against him. Fed. R. Evid. 801(d)(2)(A). Admissible under this rule is "a defendant's relevant grand jury testimony offered by the government during its case-in-chief." United States v. Meyer, 733 F.2d 362, 363 (5th Cir. 1984). Further, "[f]alse exculpatory statements may be used . . . as substantive evidence tending to prove guilt." Id.[FN8]

FN7. The government is today providing the Court and XXXXXXXXXXX with a copy of the transcript marked to show which portions the government intends to offer as evidence. XXXXXXXXXXX is asked to designate any additional portions he believes should be introduced.

FN8. Before testifying at the grand jury, XXXXXXXXXXX was advised of, and stated his understanding of, his right not to answer any question if a truthful answer would tend to incriminate him. He was also advised that anything he said could be used against him, and that his own conduct was within the scope of the grand jury's investigation. Transcript, p. 6.

H. Speedy Trial Act.

The superseding indictment was returned on July 21, and XXXXXXXXXXX appeared to plead to the new charges several days later. Nevertheless, the trial can proceed as scheduled.

The Supreme Court has held that the Speedy Trial Act's 30-day minimum period for trial preparation is unaffected by a superseding indictment. The provision in question, 18 U.S.C. § 3161(c)(2), provides that a trial cannot commence less than 30 days from the date of a defendant's first appearance in court. The Supreme Court has held:

Congress did not intend that the 30-day trial preparation period begin to run from the date of filing of a superseding indictment.

United States v. Rojas-Contreras, 474 U.S. 231, 234 (1985). The Court went on to state that if a continuance for preparation is needed due to the return of a superseding indictment, an "ends of Justice" continuance under 18 U.S.C. § 3161(h)(8) is the appropriate remedy. Id. at 236. Accord, United States v. Fesler, 781 F.2d 384, 392 (5th Cir.), cert. denied, 476 U.S. 1118 (1986).

In the instant case, XXXXXXXXXXX has not sought a continuance, nor would one be appropriate. As discussed above, the superseding indictment in this case contains fewer charges and is simpler than the original indictment, naming one defendant rather than seven. Evidence regarding the events in the two new counts would have been admissible even under the original indictment under Fed. R. Evid. 404(b). Discovery regarding the facts underlying those counts was furnished when discovery was originally provided in this case.

EVIDENCE

The government anticipates introducing some or all of the following types of evidence:

1) The government will introduce records documenting XXXXXX' purchase of vehicles 1-10 at high mileage. XXXXX XXXXXXXX, who sold these vehicles to XXXXXX, may be the witness through whom these documents come into evidence.

2) DMV title histories will be offered as evidence. These title histories include records that XXXXXX provided to dealers when he sold the vehicles, and reflect the false low mileage reading placed on the odometers of the cars. A DMV employee may describe the process by which title documents are obtained and maintained by the state.

3) People associated with the conspiracy, including convicted defendants, will testify that XXXXXXXXXXX turned back odometers for them, or that they witnessed XXXXXXXXXXX engage in activity related to odometer rollbacks. The government may call some or all of the following witnesses in this category: XXXXXX XXXXXX, Sr., XXXXX XXXXXX, XXXXXXX XXXXXX (another spinner), H.X. XXXXXXX, and other former employees of XXXXXX.

4) Law enforcement personnel to whom XXXXXXXXXXX admitted that his occupation was a spinner, who obtained XXXXXXXXXXX's agreement to roll odometers on particular vehicles, and who taped XXXXXXXXXXX turning back odometers will testify. The government may call some or all of the following in this category: NHTSA's Robert Eppes; HPD's Paul Lindsey and Gary Holmes.

5) The government intends to call an individual for whom XXXXXXXXXXX rolled back an odometer while under surveillance. This individual will testify that he paid XXXXXXXXXXX to roll back the odometer on his car (vehicle No. 12).